Venezuela Constituent Assembly seeks to woo private oil investment
By Mayela Armas
CARACAS, Sept 12 (Reuters) - An overhaul of Venezuela's
constitution being prepared by the pro-government Constituent
Assembly will likely include changes intended to attract private
investment in the country's oil fields, according to two
Production by the OPEC nation's oil industry is at a 60-year
low, leaving President Nicolas Maduro's government strapped for
cash as it grapples with hyperinflation and a fifth year of
The Constituent Assembly, whose powers supersede those of
the country's Congress, would reword some articles of the
constitution to reduce emphasis on state control of oil and ease
the way for private investment, the assembly members said.
"We must take into account the economic situation of the
country. You need investments to recover production," said
Assemblyman David Paravisini.
Assembly colleague Hermann Escarra echoed Paravisini.
"There is an opening, always with the state maintaining a
majority, (but) not opposed to foreign investments," said
Escarra, a lawyer.
Late socialist leader Hugo Chavez boosted state control over
the oil industry through a wave of nationalizations that
ultimately led to underinvestment in oil fields. Chavez also
used oil revenue to pay for social programs instead of
reinvesting in the industry.
Seeking to stem production declines, Venezuela this month
agreed to hand over at least seven oil fields to private
companies through contracts similar to ones rolled back under
Chavez, according to two sources and an internal document.
The 1999 constitution says oil industry activity is
"reserved" for the state, while the 2001 Hydrocarbons Law
requires that exploration and production be carried out by
state-majority joint ventures.
Paravisini and Escarra said the assembly would first make
changes to constitutional language.
That would be followed by legal reforms to give joint
ventures more favorable operating conditions and encourage
private investment in services companies.
Both declined to elaborate further.
They said they will submit their proposals within a month to
Constituent Assembly President Diosdado Cabello, a powerful
Socialist Party politician who will decide the reforms to be
Maduro would have to sign off on any changes, Paravisini
Venezuela's Information Ministry and PDVSA, the state oil
company, did not respond to a request for comment.
Foreign oil companies are likely remain skeptical even in
the face of significant legal reforms.
Venezuela also faces U.S. financial sanctions and more than
a dozen international arbitration cases by companies seeking
compensation for nationalizations, and it has defaulted on
billions of dollars in foreign debt.
(Writing by Alexandra Ulmer
Editing by Brian Ellsworth)
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